 Wages, selectivity, and vacancies: Evaluating the short-term and long-term impact of the minimum wage on unemploymentFrédéric Gavrel, Isabelle Lebon and Therese Rebiere Post-Print from HAL Abstract: Using a circular matching model (Marimon R, Zilibotti F. Unemployment vs. mismatch of talents: Reconsidering unemployment benefits. Economic Journal 1999;109; 266–291), where the wage setting is similar to Weiss (Weiss A. Job queues and layoffs in labor markets with flexible wages. Journal of Political Economy 1980; 88; 526–538), we reexamine Card and Krueger's (Card, D., Krueger, A. Myth and Measurement, the New Economics of the Minimum Wage. Princeton University Press; 1995) intuition on the impact of the minimum wage on unemployment. In the short term, a rise in the minimum wage increases the employment level by making firms less selective. In the long term, numerical simulations show that, despite the reduction of job creation, introducing a minimum wage may lower unemployment as soon as workers and jobs are sufficiently differentiated. However, beyond some limit, the wage increase raises unemployment whatever the degree of differentiation is. Keywords: Differentiation of skills; hiring; minimum wage; search unemployment (search for similar items in EconPapers) Published in Economic Modelling, 2010, 27 (5), pp.1274-1281. ⟨10.1016/j.econmod.2010.02.001⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00545216 DOI: 10.1016/j.econmod.2010.02.001 Access Statistics for this paper More papers in Post-Print from HAL |
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